Abstract
Securitization and the financial system Mirroring developments in the United States that date to the mid 70's, securitisation is now expanding in Europe, reinforcing changes that are taking place in the role played by financial intermediaries. From serving as essential links between lenders and borrowers, they are becoming simply one of many financial counterparts, using securitisation as a way of reducing the size of their balance sheets, as a source of financing and fee income, and as a vehicle for investment. However, such operations are not without risk for the participants. Securitising banks retain some risks (credit risk and various other risks), as do financial institutions that invest in securitisations. It is important to ensure that this transfer of risk does not result in undermining global financial stability. Thus regulation needs to take account of these developments, particularly in the context of the reform of international capital adequacy standards. JEL Classification : G19 regulation needs to take account of these developments, particularly in the context of the reform of international capital adequacy standards. JEL Classification : G19
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